In case your company is in a EU country which has adopted vat then you can choose flat rate vat if you wish to simplify your accounting and stay away from presenting vat figures in full detail http://vatcheck.com. This scheme allows you to simply calculate a prescribed percentage of your vat inclusive sales as the final vat figure without going into intricate sale or purchase details, as it is normally required when you file vat returns.
For those who have a fundamental problem of understanding what is vat and foresee problems to maintain detailed vat accounts then you can certainly opt for the vat flat rate scheme provided you fulfill the criteria set up by the tax authorities in your country. If your organization is located in the UK then you can certainly opt for vat flat rate if your estimated sales turnover in the next year excluding vat isn’t over £150,000 or including vat is not over £187,500. It is possible to remain under this scheme until your turnover touches £225,000.
Even though you will still have to display the vat amount in your vat invoice, you need not keep an in depth account of the vat figures on your sale or purchase when you might need to do under normal vat circumstances. You’ll, however be unable to go in for vat reclaim just in case you choose the flat rate vat scheme. UK offers a 1% discount scheme for the first year for firms that choose this scheme. If you happen to deal in services or goods that fall under different vat rates then you’ll need to apply the highest vat rate if you do opt for this scheme.
Thus, if you buy or sell services or goods under reduced vat rates or have to reclaim vat that has recently been paid then this scheme would not be ideal for you. However, should you mostly offer goods or services that entail standard vat rates, do not need to go in for any vat refund, or take part in retail sale then the vat flat rate scheme would be ideal for both you and your business. You could find added time to concentrate on growing your business rather than passing time on vat calculations while filing your returns would also become simpler.
These rules apply to businesses choosing the scheme in the United Kingdom. You will need to check on eu vat rules in case your business is located in another eu country. It is possible to join the flat rate vat scheme within your country by checking out the rules and filling out the necessary vat form. You will probably need to find out the classification of the services and goods so that you can use the appropriate flat vat rate while billing your clients. You may also leave the scheme to migrate to a different vat scheme by informing the relevant vat authorities prior to making your move.
Even though the system of vat is fairly easy to implement, you’ll still require the services of an expert vat agent or consultant to assist you with vat calculations, vat returns and vat refunds. However, if your business format is fairly simple and you deal in limited goods or services that fall under standard vat rates then you can go for the flat rate vat scheme to simplify your accounting.